FG orders NNPC to sell 450,000 domestic barrels to Dangote Refinery, others in naira; AFREXIM bank appointed settlement institution

Nigeria’s government has ordered the Nigerian National Petroleum Company (NNPC) to sell crude oil to the Dangote Refinery exclusively in naira, in a bid to boost the local currency and promote domestic economic activities.

The Federal Executive Council on Monday approved the proposal by President Bola Tinubu directing the Nigerian National Petroleum Company (NNPC) Limited to sell crude oil to Dangote Petroleum Refinery and other refineries in naira.

Bayo Onanuga, the special adviser to the President Bola Tinubu on information and publicity, said on Tuesday that the Federal Executive Council adopted a proposal to sell crude to Dangote Refinery and other upcoming refineries in naira.

“To ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate, the Federal Executive Council today adopted a proposal by President Tinubu to sell crude to Dangote Refinery and other upcoming refineries in Naira,” Onanuga said on his X account on Monday.

He added, “The FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as a pilot. The exchange rate will be fixed for the duration of this transaction.”

“Dangote Refinery at the moment requires 15 cargoes of crude, at a cost of $13.5 billion yearly. NNPC has committed to supply four.”

“Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited. The game-changing intervention will eliminate the need for international letters of credit. It will also save the country billions of dollars used in importing refined fuel”.

Zacch Adedeji, the chairman of Federal Inland Revenue Service (FIRS) also confirmed the move while briefing State House Journalists, after a meeting of the Federal Executive Council FEC meeting presided over by President Bola Tinubu

Adedeji, disclosed that the arrangements was facilitated by AFREXIM bank to promote trade of crude oil in local currency.

“With effect from today, the Nigeria National Petroleum Company Limited (NNPC) will sell crude oil to local refineries and engage with the refineries on the basis of local currency,” Adedeji said.

“The sale of crude oil to Dangote refinery will be done in naira to reduce pressure on the local refineries.”

He noted that about $660m or N7.92b is spent to procure crude which places pressures on the nation’s foreign exchange, which the new measures will aim to reduce by about 90%.

Giving details on the economic benefits, Adedeji said the new policy will make the economic predictability a reality.

Other benefits include, reduction in foreign exchange pressures by about 94% and saving of finance cost of about $79m

“Council approve that AFREXIM bank will be the settlement bank, while the government will definitely be in charge of the mainstay of our economy,” he said.

Recall for over two decades, Africa’s biggest economy has operated an arrangement that ensures that about 445,000 barrels of crude oil per day (the nameplate capacity of Nigeria’s four government-owned refineries) are set aside from the federation’s share of oil and channeled for domestic refining.

But a chunk of the 445,000 bpd to be allocated to a complex oil-for-product swap between NNPC and trading companies, an arrangement popularly called the Direct Sale Direct Purchase program.